The current value of a trading account including unrealized profits and losses from open positions. Drawdown limits are often measured from equity peaks.
Equity differs from balance: balance only changes when trades are closed, while equity fluctuates with open positions. Many prop firms measure drawdown based on equity rather than balance, meaning unrealized losses count against your limits. If your $100K account has $2,000 in unrealized losses, your equity is $98,000 and your drawdown is 2%, even though your balance still shows $100,000.